my fox

3,193 views

Published on

0 Comments
9 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,193
On SlideShare
0
From Embeds
0
Number of Embeds
19
Actions
Shares
0
Downloads
0
Comments
0
Likes
9
Embeds 0
No embeds

No notes for slide

my fox

  1. 1. Page 1 “7-Day FX Master Trader Program” an introduction to trading for a living Written by: iFund Traders, LLCCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025 Rev. 10/16//10
  2. 2. Page 2 DisclaimerCopyright© 2010 by iFundtraders LLCPublished by iFundtraders LLCAll rights coveredReproduction or translation of any part of this work beyond that permitted by section 107 or 108 of the 1976 United StatesCopyright Act without the permission of the copyright owner is unlawful. Requests for permission or further informationshould be addressed to the Permissions Department at iFund Traders, LLC.Neither iFund Traders, LLC or it’s instructors are advising anyone to trade or use any system illustrated in this course.These are educational examples of science of system testing and development that iFund Traders, LLC want to share withyou. None of the information illustrated in these examples is to be construed as offers to buy or sell commodities, stocks,FX, or any other financial instrument. None of the information presented purports to be a complete statement of allmaterial facts related to trading.Also, simulated performance results have certain inherent limitations; the results do not represent actual trading. Sincemany of the trades in this series have not been executed, the results may have under or over compensated for the impact,if any, of certain market factors, such as lack of liquidity. No representation is being made that the systems, methods orideas shown in this course will produce the results that are described or illustrated.This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. Itis sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or otherprofessional services. If legal advice or other expert assistance is required, the services of a competent professionalperson should be sought.From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee ofPublishers.Active trading is an activity that possesses a high level of risk and may not be suitable for everyone.ISBN 1-59280-253-2Printed in the United States of America.
  3. 3. Page 3“iFund Traders” An Introduction to iFund Traders, LLC CHAPTER 1
  4. 4. Page 4Our Website
  5. 5. Page 5 FOREX Background & Introduction CHAPTER 2“Every single transaction is both a buy and a sell, and is therefore neutral. The opening transaction or tick, for any time frame is the most important for iFund Traders” – Oliver L. Velez
  6. 6. History of FOREXFOREX - the foreign exchange market, currency market, FX market orForex is the market where one currency is traded for another. The needto exchange currencies is the primary reason why the Forex market is thelargest, most liquid financial market in the world.In the foreign exchange market there is little or no inside information.Exchange rate fluctuations are usually caused by actual monetary flowsas well as anticipations on global macroeconomic conditions. Significantnews is released publicly so, at least in theory, everyone in the worldreceives the same news at the same time.Unlike stocks and futures exchanges, the Forex is indeed an interbank,over-the-counter (OTC) market which means there is no single universalexchange for a specific currency pair. The foreign exchange marketoperates 24 hours per day, Sunday through Friday between individualswith Forex brokers, brokers with banks, and mostly banks with banks. Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  7. 7. FOREX – Global Market ScheduleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  8. 8. FOREX Terminology Major Currency Acronyms USD = United States Dollar EUR = Euro Dollar GBP = Great Britain Pound JPY = Japanese Yen CAD = Canadian Dollar CHF = Confederatio Helvetica (Latin for Swiss Confederation) Franc NZD = New Zealand Dollar AUD = Australian DollarCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  9. 9. FOREX Terminology What Does Currency Pair Mean?The quotation and pricing structure of the currencies traded in the Forexmarket: the value of a currency is determined by its comparison toanother currency. The first currency of a currency pair is called the"base currency", and the second currency is called the "quotecurrency". The currency pair shows how much of the quote currency isneeded to purchase one unit of the base currency. EUR/USD Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  10. 10. FOREX Terminology What Does Base Currency Mean? The first currency quoted in a currency pair on Forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.   It is sometimes referred to as the "primary currency". EUR/USD Base CurrencyCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  11. 11. FOREX TerminologyWhat Does Quote Currency Mean?The second currency quoted in a currency pair in Forex. In a directquote, the quote currency is the foreign currency. In an indirect quote,the quote currency is the domestic currency.Also known as the "secondary currency" or "counter currency". EUR/USD Quote Currency Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  12. 12. FOREX TerminologySince the “Quote / Counter Currency’ is the part of the currency pair thatfluctuates higher or lower, it determines the strength or weakness of bothcurrencies in a currency pair. As one currency goes up, the other must go down.When a currency pair goes from a low price to a higher price, the Base Currencyis said to have strengthened or gotten stronger. The converse is true for theCounter Currency. That is, it has weakened or gotten weaker as the BaseCurrency has gotten stronger.Since Exchange Rates represent what a fixed amount of currency is equal to interms of another currency, we have seen there is just one price for the CurrencyPair. The movement of that price determines whether a currency is gettingstronger or weaker.If the EUR/USD exchange rate goes from 1.2000 to 1.2024, we have concludedthat the EUR got stronger, the USD weaker. Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  13. 13. FOREX Terminology EUR/USD (Base / Quote) Strong WeakWeak Strong Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  14. 14. FOREX Terminology What is a “PIP”?Pip stands for "percentage in point" and is the smallestincrement of trade in FX. In the FX market, prices are quoted tothe fifth decimal point. For example, if a bar of soap in the drugstore was priced at$1.20, in the FX market the same bar of soap would be quoted at1.20000. The change in that fourth decimal point is called 1 pip.The 5th and final decimal place measures a fraction of a pip.Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  15. 15. FOREX Terminology What is a “PIP”? EUR/USD EUR/JPY 5 decimal places 3 decimal places 1.314 2 0 108.7 4 0 Pip Pip Fraction of a Pip Fraction of a PipCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  16. 16. FOREX Terminology What is a “PIP”? In Forex, currency prices are typically quoted to the fifth decimal. For example, if the EUR/USD pair moves from 1.34100 to 1.34150 it has moved by 5 pips. If the EUR/USD increases by 1 full cent in value (from 1.34100 to 1.35100), it has increased by 100 pips. If the EUR/USD pair moves from: 1.34120 to 1.34187 How many pips has price moved? 6.7 PipsCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  17. 17. Understanding a Currency Chart GBP/USD What is a “PIP”? 1.55609 (Short entry)_ 1.54624 .00985 98.5 Pips (Take profit)Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  18. 18. FOREX Terminology What is a value of a “PIP”? Currency is traded in lots. One standard lot of U.S. dollars is $100,000. The pip value is how much a change of one pip is worth for one lot. For the U.S. dollar, the pip value is 1/100 of 1 percent of $100,000, or $10. Each currency has its own pip value, depending on its pip and the size of the standard lot of currency. If the EUR/USD moves from: 1.32450 to 1.33530 Price has moved how many Pips? 108 Pips 108 pips x $10/per pip = $1,080 per lotCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  19. 19. Understanding a Currency Chart Average Daily Ranges of Pips Day of Week EUR/USD GBP/USD USD/CHF USD/JPYMonday 138 131 97 63Tuesday 160 162 123 84Wednesday 140 142 107 86Thursday 158 143 118 80Friday 152 141 115 81 Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  20. 20. Understanding a Currency ChartCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  21. 21. Page 21 Candles Light The Way The Market’s Four Major Ticks CHAPTER 3“Every single transaction is both a buy and a sell, and is therefore neutral. The opening transaction or tick, for any time frame is the most important for iFund Traders” – Oliver L. Velez
  22. 22. Page 22The ‘Opening’ is Everything
  23. 23. Page 23 The ELEPHANT BAR High High Low Low Bulls Win Bears WinEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is well above the open, the bulls win,producing the color green. When the close is well below the open, the bears win,producing the color red. How much each side wins is determined by how much green orred they produce. In other words, the wider the distance between the open and close, thegreater the win. When the bar is big, relative to the recent bars on the chart, it is called an“elephant” bar.
  24. 24. Page 24 The ELEPHANT BAR It should not be difficult, it should be obvious - CAN YOU SPOPT THE ELEPHANT? 5 7 8 21 4 6 3
  25. 25. Page 25 The ELEPHANT BAR It should not be difficult, it should be obvious - CAN YOU SPOT THE ELEPHANT? 5 7 8 21 4 6 3
  26. 26. Page 26 Elephant Bars Igniting or Exhausting EXHAUSTING IGNITINGIGNITING Elephant Bars (aka WRB’s wide range bars) that start a new move or EXHAUSTING trigger a new entry in the continuation of a trend tend to be igniting in nature and follow through is expected. When these same bars appear after a move has already been underway they represent the final push, the last hoorah, and often lead to a pause and or change the momentum to the opposite direction
  27. 27. Page 27 The ELEPHANT BAR High High Open Open Low Low Bulls Win Bears WinIf an elephant bar closes not too far off its extreme with a strong amount of color (green orred), there is an 82% chance that the next bar will produce the same color. iFund TradersTip: Traders using my momentum style would look to dive into the bar following a strong“win” bar, but not at the open, as is shown above. More than the open is needed in orderto commit to the trade. The next bar has to confirm the strength of the original “win” barby first producing a small amount of the same color. See next page.
  28. 28. Page 28 The ELEPHANT BAR Buy Stop 1 High High Low Low Stop 1 Short Bulls Win Bears WiniFund Traders employing my momentum style of trading would look to buy once the barfollowing a strong “win” bar shows a small amount of the same color. The stop wouldinitially be placed at the low (for green) or high (for red) of the “win” bar. iFundTraders Tip: My momentum style has the best odds when the “win” bar is the first realsizable bar in 8 bars or more and the bar preceding the win bar is either the opposite coloror a very small bar of the same color.
  29. 29. Page 29 The ELEPHANT BAR Buy High High Stop 2 Stop 2 Low Low Short Bulls Win Bears WinOnce the trader commits, and the current bar trading grows to regular size, an adjustmentin the stop can be made. The adjusted stop is placed 1 penny under the current bar’s low ifgreen and 1 penny above the current bar’s high if red. iFund Traders Tip: The purposeof the stop in this case is to protect the previous bar’s color. At this point, a movementback into the previous bar’s range would be negative, therefore the stop is adjusted toprevent this.
  30. 30. Page 30 Absolute Control High High Low Low Bulls in absolute control Bears in absolute controlAbsolute control exists when a very solid colored bar is trading at its extreme. When asolid green bar is currently trading at its absolute high, bulls are in absolute control. Whena solid red bar is currently trading at its absolute low. iFund Traders Tip: It’s the upperend of a green bar and the lower end of a red bar that truly determines the potency or lackthereof of the group currently producing the color.
  31. 31. Page 31 Full Control High High Low Low Bulls in full control Bears in full controlFull control exists when a very solid colored bar is trading just a tad bit off its extreme. When arelatively solid green bar has pulled back off the high, but the bar is still dominantly green, bulls are infull control. When a relatively solid red has moved up off the low, but the bar is still dominantly red,bears are in full control. iFund Traders Tip: I repeat, it’s the upper end of a green bar and the lowerend of a red bar that truly determines the potency or lack thereof of the group currently producing thecolor.
  32. 32. Page 32 Good Control High High Low Low Bulls still in control Bears still in controlGood control exists when a solid colored bar has moved well off the extreme, but not enough tojustify calling the bar wrecked or weak. When a green bar has pulled well off the high, but the bar isstill mostly green, bulls are in good control. When a red has moved up well off the low, but the bar isstill mostly red, bears are in good control. iFund Traders Tip: This is often what a bar will do afterthe trader has already committed to a play. These bars should not necessarily scare traders or makethem doubt the power of the group producing the color…not at this point. This bar typicallyrepresents the squat before a dancer’s leap back to strength.
  33. 33. Page 33 Weak Control High High Low Low Bulls’ weakening control Bears’ weakening controlWeak control exists when a solid colored bar has lost about ½ of the color it once had. When a greenbar has pulled deep off the high to eliminate about 50% of the green it once had, bulls might be introuble. When a red bar has moved up deep off the low to eliminate about 50% of the red it oncehad, bears might be in trouble. iFund Traders Tip: This scenario does not guarantee that a full lostof control will materialize, but if the market is behind the counter –color move, the odds are goodthat the control is going to change.
  34. 34. Page 34 Lost Control High High Last Trade Last Trade Low LowBulls lose control to Bears Bears lose control to BullsLost control exists when a previously solid colored bar loses 2/3 or more of the color itonce had, leaving the tail as the most dominant part of the bar. When a very solid greenbar has pulled back so far off the high, leaving behind more tail than color, bulls have losttheir power. When a very solid red bar has moved back up so far off the low, leavingbehind more tail than color, bears have lost their power. iFund Traders Tip: This is thepicture of change, the picture of the shift in power from one group to the other. I teach mytraders to capitalize on change, making this a key action event.
  35. 35. Page 35 Totally Over!! 100% 100%Bears in permanent control Bulls in permanent controlEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win, and whenall that color is erased, the greater the odds of a change in control.
  36. 36. Page 36 Control Forever!! 100% 100%Bears in control forever Bulls in control forever Every individual bar represents a battle that was fought by two groups, the bulls and bears, the buyers and sellers. When the close is above the open, the bulls win, producing the color green. When the close is below the open, the bears win, producing the color red. How much each side wins is determined by how much green or red they produce. In other words, the wider the distance between the open and close, the greater the win, and when all that color is erased, the greater the odds of a change in control. iFund Traders Tip: when all the color of a wide bar is erased and the opposite color is produced, you have usually found the high or the low for some time to come.
  37. 37. Page 37 Full Control High High Low Low Bulls in Control Bears in ControlEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win.
  38. 38. Page 38 Good Control High High Low Low Bulls still in control Bears still in controlEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win.
  39. 39. Page 39 Weak Control High High Low Low Bulls weakening control Bears weakening controlEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win.
  40. 40. Page 40 Lost Control High High Low Low Bears back in control Bulls back in controlEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win. iFundTraders Tip: However, if more than 2/3 of any color is suddenly erased, the law offollow-through is greatly diminished.
  41. 41. Page 41 Totally Over Forever! High 100% 100% Low Bears in control forever Bulls in control foreverEvery individual bar represents a battle that was fought by two groups, the bulls andbears, the buyers and sellers. When the close is above the open, the bulls win, producingthe color green. When the close is below the open, the bears win, producing the color red.How much each side wins is determined by how much green or red they produce. In otherwords, the wider the distance between the open and close, the greater the win.
  42. 42. Page 42 “Velez Market Law 1” CHAPTER 4“I’m not sure if Sir Isaac Newton ever played the market, but many of his discoveries and realizations lend themselves to proper market play.” – Oliver L. Velez
  43. 43. Page 43 Velez Market Law #1 The Law of MomentumDuring MOVING market environments, FX and other tradable items tend to followthrough or continue the most recently completed color-coded bar, 80% of the time, aslong as most of the color has been maintained. Sir Isaac Newton: “An object in motion tends to stay in motion.” Different ways to communicate the law: 1) After a solid Green Bar, expect another one to follow 80%; 2) After a solid Red Bar, expect another one to follow 80% 3) The bigger the green or red bar, the higher the odds of follow through, meaning you’ll see continuance closer to 90% of the time. 4) A small amount of green or red does not give the iFund Traders enough to go on. More information is needed in that case.
  44. 44. Page 44 “The Market’s 13 Bars” “There are only 13 bars the market can form. They represent the market’salphabet, if you will. Learn these bars and what they mean and you’ll be set to Trade for Life™.” – Oliver L. Velez
  45. 45. Page 45 The 10 Colored Candles 1 2 3 4 5 2nd Most Bullish Normal BullishMost Bullish Least Bullish Neutral Bull 6 7 8 9 10 2nd Most Bearish Least Bearish Neutral Bear Normal Bearish Most Bearish The first set of bars is won by the bulls in varying degrees, with the last bar being an actual loss. The most bullish is at the left, the least is at the right. The same goes for the bear wins. The most bearish starts at the left, the most questionable is at the far right.
  46. 46. Page 46 The 3 Non-Color Candles 11 12 13 All green was lost All red was lost DrawTip: While technically no one wins, due to the open and close being even, the last group incontrol of the price is considered the winner. Bar 1, is completely a draw, Bar 2 is won by thebears and Bar 3 is won by the bulls. Sellers dominate Topping Tail (TT) Buyers dominate this entire area this entire areaBottoming Tail (BT) Bottoming tails (BTs) and Topping Tails (TTs) offer iFund Traders some incredible trading opportunities, which we will see shortly.
  47. 47. Page 47 The Four Trading Time Frames CHAPTER 5“The following three time frames are used by iFund Traders to earn a living in the markets. These time frames are income generators, not wealth builders. They are used to making money on a daily basis”
  48. 48. Page 48 Four Trading Time Frames1) 5-minute Chart – This time frame is a key time frame for finding very tight stop entires with very large profit potential. The patterns we trade appear frequently enough in the 5- minute window to keep us active, yet infrequently enough to prevent us from over trading. This is a nice time frame to master.2) 15-minute Chart – This time frame allows traders to capture some of the biggest moves without having to make split second decisions. Fifteen minutes is plenty of time to measure for stops, identify targets, and spot key support and resistance before having to commit to a trade. Since FX trades can last 24hrs a day, there are plenty of opportunities on this time frame.3) 30-minute Chart – This time frame fits perfectly between the 15 and 60 minute time frames and shares the characteristics of both; it can be used to spot trends, key support and resistance and also has opportunity to find tradable patters that produce big moves.4) 60-minute Chart – While in some markets this is considered to just be a primary trending time frame for day traders, the 24 hr nature of the FX market makes this another powerful trading time frame as well as helping to identify trends and key support and resistance points. Finding quality patterns on this time frame can lead to some moves that can last all day or days instead of just minutes and can result in some incredible profits. Note: The 8-period, the 20-period moving average (20ma) and the 200-period moving average (200ma) are used on all three, the 5, 15, and 60 minute charts. Keep in mind that the 20ma and 21ma are interchangeable. It’s a personal choice.
  49. 49. Page 49 The 5-Minute Chart Trading Tip: iFund Traders look to go long when the r20ma is above the 200ma. They look to go short with the d20ma is blow the 200maWhen a FX pair is able to consistently outpace theaverage price of the last 20 bars, it is a powerfulindication of institutions at work and iFund traders willlook to capitalize by following along with this powerfultrend r20ma Flat 200ma
  50. 50. Page 50 The15-Minute Chart d20 maNotice the price is declining with thed20ma, and at or near the point of contactwill be trading opportunities for theiFund trader to capitalize on thispowerful move.
  51. 51. Page 51 The30-Minute ChartBear Elephant causes breakdown –notice the move that follows d20 ma Notice the price is declining with the d20ma, and at or near the point of contact will be trading opportunities for the iFund trader to capitalize on this powerful move.
  52. 52. Page 52 The 60-minute Chart Circles show well-defined sell opportunities for the iFund Trained Trader.iFund Traders Tip: This time frame offers nice opportunitiesto capture entire trend using the 20ma.
  53. 53. Page 53 The Three Analytical Time Frames CHAPTER 6 “The following three time frames help iFund Traders establish a bias for the market.. Knowing how to determine what direction is more likely than the otherover the next few days, hours or 15 minutes is one of the true keys to accuracy as a trader” – Oliver L. Velez
  54. 54. Page 54 Three Analytical Time Frames1) Daily Chart – This time frame is key to determining upside and downside biases based on the prevailing trend. Certain price patterns that form on the daily chart have a high probability of moving in a predetermined direction for days at a time and can lead to major multi-day moves. This proves very valuable to iFund Traders looking to take advantage of holding part of trade as a “core: position for the day or even the week when the trend is strong, and with well defined daily chart patterns, it will lead to it being a focus over several days.2) Weekly Chart – This time is almost never used for trading, but it is unrivaled when it comes to finding major “reflection points,” areas of major significance which often lead to abrupt stoppages and sudden reversals during the day. The iFund Traders will use the weekly chart simply to reference these points and to gauge the major trend of the underlying FX pair.3) 4 hr Chart – This time frame will be used primarily for trend analysis and support and resistance reference points. While iFund Traders do take trades on it from time to time, its use as a gauge of the currency pair’s power and it’s trend are priceless. With that being said, trades on the 4 hr chart can lead to the powerful multi-day moves. In a sense, for the professional trader earning a living via the markets, this time frame would be considered the “core” one, for longer term multi-day trades throughout the week. Note: The 8, 20 and 200 MAs are typically used for the daily, weekly and 4 hr chart.
  55. 55. Page 55 The Three Trading Moving Averages CHAPTER 7“There are three moving averages iFund Traders monitor at all times." The moving averages form the basis for many of our biggest money making strategies.” - Oliver L. Velez
  56. 56. Page 56 Three Major Moving Averages1) 8-period Moving Average (8ma) – This simple moving average is superior at capturing and supporting the market’s most powerful moves. If price is moving with a fury (up or down), it is this moving average that the price will often react off of. We also use this moving average as the basis for one of our most effective trailing stop methods, which we will discuss shortly. iFund Traders have the 8ma on every chart they look at.2) 20-period Moving Average (20ma) – This simple moving average is the number one staple for iFund Traders. No chart is ever looked at without the aid of the 20ma. In fact, I don’t regard a chart as being valid unless it is accompanied by the 20ma. It reveals the directional bias, acts like a magnet and tells the trader where significant areas of support and resistance are. Keep in mind that the purest would use a 21-period MA. We round to 20, knowing that moving averages are simply areas, not specific prices.3) 200-period Moving Average (200ma) – This simple but major moving average is the granddaddy of them all. It’s almost magical how often price and the overall market obey this slow moving line. Many of iFund Traders’ most successful trades originate off the 200ma. It is always in view and is given the utmost respect.
  57. 57. Page 57 The Powerful 8MA & 20MA1) 8 & 20 Period Simple Moving Average – The 8ma & 20ma (or the 21ma) are so important to iFund Traders that no chart is ever studied or viewed without them. That’s because their power and reliability are unrivaled. No chart is a chart unless it is accompanied by these all-important technical indicators. We use them on every time frame or chart we look at. Tip: The iFund Traders Trader can literally earn his entire living in the market with the 8ma & 20ma. Here are the most important things to know about the 8ma & 20ma and their proper use: a) Trade with the 8ma & 20ma, not against them - Most of your trades should be in sync with the 20ma. If the 8 & 20ma are rising in a smooth fashion, your focus should almost always be long. Conversely, if the 8 & 20ma are declining in a smooth fashion, your focus should almost always be to short. If the 20ma is flat (f20ma), your focus can be to liquidity trade with the “bid and offer” approach (buy below the 20ma; sell above the 20ma). b) Use 8ma & 20ma as support & Resistance – If and when the 8 and/or 20ma is rising , it will serve as strong support. If the 8 and/or 20ma is declining, it will serve as strong overhead resistance. Look for buys at or near a r8ma or r20ma. Look for sells/shorts at or near a 8ma or 20ma. c) Use 20ma as a median line – When a currency pair is consolidating in a sideways pattern, the 20ma will be flat and usually positioned right in the middle of the sideways trend. If and when this is the case, buying near the bottom in a range below the 20ma and offering/shorting near the top of a range above the 20ma is the game to play. Always be watchful of which side the 20ma eventually halts the price on, for it is the potential start of the next trending move.
  58. 58. Page 58 The 15 Min Chart -20ma powerPrice rising above a rising 8ma, above a rising 20ma – picture of r8mapower for the iFund trained trader. Long opportunities wouldbe sought out on this and the other trading time frames. r20ma Chart Courtesy of iFund Traders Pro™
  59. 59. Page 59 The 60 min Chart – 20 ma power d20ma d8maPrice falling below a d8ma, below a d20ma – picture ofpower for the iFund trained trader. Short opportunitieswould be sought out on this and the other trading timeframes.
  60. 60. Page 60 The 4 hr Chart – 20ma power d20ma d8maPrice falling below a d8ma, below a d20ma – picture ofpower for the iFund trained trader. Short opportunitieswould be sought out on this and the other trading timeframes.Note – As mentioned earlier – when the 4 hr chart is trending, it canlead to multi-day moves without breaking trend, notice how the 20mawould have kept you short for days at a time Chart Courtesy of iFund Traders Pro™
  61. 61. Page 61 The 20ma Halt!When the 20ma becomes flat and wavy, price willtend to move equal distance above and below, almost Bull elephant kicks off theignoring the 20ma. Once the price is halted or caught new move following the haltby the 20ma, get ready for the next move – you havejust found the start of a potential trend 20ma HALT
  62. 62. Page 62 The 20ma Halt First Halt stops the expected move up after two BT’s Second Halt sends the price crashing lower with a Bear Elephant barWhen the 20ma becomes flat and wavy, price willtend to move equal distance above and below, almostignoring the 20ma. Once the price is halted or caughtby the 20ma, get ready for the next move – you havejust found the start of a potential trend
  63. 63. Page 63 The Mighty 200 MA2) 200 Period Simple Moving Average (200ma) – The 200ma is so universally watched, in all time frames, that for all practical purposes, it has become a self-fulfilling prophesy. So rarely do FX pairs fail to obey (get halted by) the 200ma that we’ve given it the highest nick-name of all, Goliath. It’s power, force, and reliability are so great, that it truly is goliath-like. We use the 200ma on all time frames. Here are a few things that you must keep in mind regarding this mighty moving average: a) Flatness is king: - While the 20ma is most powerful when it is rising and declining (trending), the 200ma is most powerful when it is flat (trend-less). b) Use as support – Whenever price declines to a flat 200ma, it will almost always experience some form of rebound, particularly if the 20ma is far away. c) Use as resistance – Whenever price rallies to a flat, overhead 200ma, it will almost always experience some form of retracement back down, particularly if the 20ma is far away. Trading Tip: iFund Traders know that flat 200ma plays call for bigger positions
  64. 64. Page 64 The Flat Mighty 200ma The Flat 200ma would have been expected support (1), but once broken and retested (2), it now becomes strong resistance (3,4). Notice the nice measured moves once the 20ma becomes flat and wavy and the 200ma serves as the resistance. 3 4 21 Charts Courtesy of iFund Traders Trader Pro®
  65. 65. Page 65 200ma support-resistance Notice how the flat 200ma acts as very strong support, but once broken and retested it becomes equally strong resistance First break and retest of support Confirmed resistance on next retestHolding support in the upperthird of the bull elephant bar
  66. 66. Page 66 Flat Mighty 200ma What key event happens right at the flat 200ma?Notice the power of this 200ma play – not onlydoes it stop the uptrend dead in its tracks, butsends it on a 100% retracement of the prior move
  67. 67. Page 67 “Velez Market Law 2” CHAPTER 8“The number 1 has never and never will be a popular number for the market. Italways seems to require something more than one, or once, or one time. In otherwords, the market likes confirmation. ‘One time’ never cuts it.” – Oliver L. Velez
  68. 68. Page 68 Velez Market Law #2 The Law of “2”The market never accomplishes anything with just one bar. It needs atleast two bars to regard something as being real or significant.Follow-through by a second bar is crucial, otherwise the one barevent, no matter how apparently significant, is not yet real. Different ways to communicate the law: 1) A one bar breakout is only significant if followed through by asecond up bar; 2) A one bar breakdown is only significant if it’s followed through by a second down bar; 3) One bar events with no follow through tend to eventually producestrong moves in the opposite direction.
  69. 69. Page 69 Velez Market Law #2(1) Bull elephant kicks off the move(2) Bear elephant closes below the 20ma and then has the low of that bar brokenconfirming a break of the 20ma(3) Price moves back above a flat wavy 20ma and then has another Bear elephant barclose below the 20ma, BUT THERE IS NO FOLLOW THROUGH(4) This leads to a 20ma halt and a Bull elephant bar starts the next move higher(5) Notice the next “fake” break of the20ma, but our traders did not get shaken outdue to Market Law #2 5 2 3 4 1
  70. 70. Page 70 Velez Market Law #2 2 31
  71. 71. Page 71 “Velez Market Law #3” CHAPTER 9 iFund Traders Quote: “All markets have statistical limits. The trader whothoroughly understands when markets are statistically at or near the outer bounds of their norms will become a master, and possibly even rich!” - Oliver L. Velez
  72. 72. Page 72 Velez Market Law #3 The 3, 5, 8 Bar MaxDuring NORMAL market environments, FX and other tradable items usually will not move in the same direction more than 5 to 8 bars in a row; however, price tends to stay trapped in a 3 to 8 bar max cycle 80% of the time. 20% of the time, price moves can top and bottom outside of this zone. But 5 bars is truly the pivotal number. Different ways to communicate the law: 1) After a 3 to 5 bar run (up or down) the market tends to sharply reverse, creating a nice trading opportunity. Every now and again, it can slip into the next 5 to 8 bar zone. 2) Neither the bulls nor the bears can consistently win more than 5 battles (bars) in a row. After a sharp 3 to 5 bar rally, the bears usually quickly regain control. After a sharp 3 to 5 bar decline, the bulls usually quickly regain control. These moves can move to the 5 to 8 bar zone at times. 3) Lastly, this law can be said this way: “After 3 to 5 green bars in a row, the iFund Trader should look to take advantage of an upcoming series of red bars. After 3 to 5 red bars in a row, the iFund Trader should look to take advantage of an upcoming series of green bars.”
  73. 73. Page 73 The 3 to 5 Bar Buy RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable rebound to the upside, once the high of aprior bar has been taken out. How much of a rebound would depend on the answers to several key questions such as: a) isthe 3-5 bar dip occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the dip in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  74. 74. Page 74 The 3 to 5 Bar Buy RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable rebound to the upside, once the high of aprior bar has been taken out. How much of a rebound would depend on the answers to several key questions such as: a) isthe 3-5 bar dip occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the dip in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  75. 75. Page 75 The 3 to 5 Bar Buy RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable rebound to the upside, once the high of aprior bar has been taken out. How much of a rebound would depend on the answers to several key questions such as: a) isthe 3-5 bar dip occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the dip in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  76. 76. Page 76 The 3 to 5 Bar Buy RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable rebound to the upside, once the high of aprior bar has been taken out. How much of a rebound would depend on the answers to several key questions such as: a) isthe 3-5 bar dip occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the dip in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  77. 77. Page 77 The Picture of StrengthCircles show well-defined buy opportunitiesfor the iFund Trained Trader.
  78. 78. Page 78 The 3 to 5 Bar Sell RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable decline to the downside, once the low ofa prior bar has been taken out. How much of a decline would depend on the answers to several key questions such as: a) isthe 3-5 bar rally occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the rally in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  79. 79. Page 79 The 3 to 5 Bar Sell RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable decline to the downside, once the low ofa prior bar has been taken out. How much of a decline would depend on the answers to several key questions such as: a) isthe 3-5 bar rally occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the rally in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  80. 80. Page 80 The 3 to 5 Bar Sell RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable decline to the downside, once the low ofa prior bar has been taken out. How much of a decline would depend on the answers to several key questions such as: a) isthe 3-5 bar rally occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the rally in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  81. 81. Page 81 The 3 to 5 Bar Sell RuleIn each of the scenarios above, the iFund Trader would be looking for a tradable decline to the downside, once the low ofa prior bar has been taken out. How much of a decline would depend on the answers to several key questions such as: a) isthe 3-5 bar rally occurring in an up trend, down trend or sideways trend; b) are any of the most powerful reversal signspresent; c) how far away is the nearest area of resistance; d) where is the rally in relation to the 20ma; and e) is the currentdecline potentially bottoming at or around one of the key reversal times? The answers to all these questions are covered inthe many trading concepts taught in the future chapters and through out our 5-day live trading labs
  82. 82. Page 82 The Picture of Power Circles show well-defined short opportunities for the iFund Trained Trader.iFund Traders Tip: This time frame offers nice opportunitiesto capture entire trend using the 20ma.
  83. 83. Page 83 “Velez Market Law #4” CHAPTER 10 Quote: “Market failures tend to cause major problems for most ordinary traders, but they can serve as major money making opportunities for well trained iFundTraders! In other words, we are always prepared to profit from the market’s failed attempt to do something highly expected.” - Oliver L. Velez
  84. 84. Page 84 Velez Market Law #4 The Failed New Low/High Law“If price fails to make a new pivot low, after it has already made 3 or morelower pivot lows, it will make a new high relative to the previous pivot.Conversely, if price fails to make a new pivot high, after it has already madea series of higher pivot highs (3 or more), it will make a new low relative tothe previous pivot.” Different ways to communicate the law: 1) The first failed attempt to make a new low in a well established downtrend is the first sign that the balance of power has shifted from the sellers back to the buyers. The tend has likely changed and the first low in the new trend has been identified. 2) The first failed attempt to make a new high in a well established uptrend is the first sign that the balance of power has shifted from the buyers back to the sellers. The trend has likely changed and the first high in the new trend has been identified. 3) The first failed attempt to make a new high or low in a well established trend is the first sign that the back of the existing trend has been broken and the opposing side is ready to regain control.
  85. 85. Velez Market Law 4 Click to add subtitle 1 2 3 4 5Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  86. 86. Velez Market Law 4Can you name the events on the chart ? 4 5 3 2 1 Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  87. 87. Page 87 The Fibonacci Sequencemajor market moves
  88. 88. Page 88 The Fibonacci SwingYour pairs become playable once they begin to swing in 3, 5 and 8-bar cycles. If your pairsare not providing at least three bars of the same color, then they should be left alone. 1 to 2bar cycles are “no-follow-through” markets that generate a lot of whipsaws and losingtrades. Tip: The first time your pair produces a 3-bar rally or decline of the same color, itshould demand your attention.
  89. 89. Page 89 “iFund Traders” The Three Major Trailing Stop Methods CHAPTER 11“The idea is to get out fast when a trade goes against you.” - Jesse Livermore
  90. 90. Page 90 iFund Traders Trailing Stop Method 1iFund Traders Bar-by-Bar Stop MethodOnce the iFund Trader has entered his long, and placed his initial stop, it’s a boom or bust scenario, meaning thateither the trader will hit his anticipated target or get out at his initial stop. Once there is a two bar lift (this includesthe entry bar if it ends higher than the buy price), the trader would launch into “training stop” mode. During thismode, the trader would maintain a mental stop 1 pip below the prior bar’s low at all times. As each new bar begins,the trailing stop is moved up, always staying only one bar behind the bar currently trading. The same would applyin reverse, as evidenced by Figure 2.
  91. 91. Bar-by-Bar Trailing StopThe numbers show each stopadjustment made at the close of thebar Copyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  92. 92. Bar-by-Bar Trailing Stop The numbers show each stop adjustment made at the close of the barCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  93. 93. Page 93 iFund Traders Trailing Stop Method 22) iFund Traders 8ma Momentum Stop Method – This is by far the most dynamic trailing stop method we deploy, but requiresnerves of steel to put into practice. It represents one of my personal favorites because of its superior ability to keep the trader in atrade during the sweetest (strongest) part of the move. Bar-by-bar noise is illuminated, allowing the trader to focus on what counts,the force of the trend. What must be kept in mind is that when things are not in a trending mode, this stop method will result infrequent “whip-saws.” But, with proper timing, it (like its bigger brother, the 20ma trailing stop method) is unrivaled when itcomes to “milking” the best part of a trend’s move. Note: We allow iFund Traders to use this stop method right from the initialstages of their trading. Figure 2 a Buy (1) Buy (2) Short (2) 8ma Short (1) a 8ma Figure 1In the above Figure 1, the iFund Trader would simply buy at point 1, and sell into the initial rise, anticipating apullback before the secondary leg. At buy point 2, the iFund Traders Trader could try to hold on to the trade aslong as it remained above the r8ma. Essentially, at that point, the 8ma would become the iFund Traders trailingstop. Everything would be handled in reverse for Figure 2.
  94. 94. Page 94The 8ma Bull Run
  95. 95. Page 95The 8ma Bull Run
  96. 96. Page 96 The Picture of StrengthCircles show well-defined buy opportunitiesfor the iFund Trained Trader.THE 8-TRAINNotice the 8ma contains this entire move, and never has atwo bar break, so the trail is never broken – this kind ofpower and trail is referred to as the “8-TRAIN” and ittakes traders for a ride into the land of major profitability
  97. 97. Page 97The 8ma Bear Run
  98. 98. Page 988ma Bear Run
  99. 99. Page 99 iFund Traders Trailing Stop Method 3 3) iFund Traders 20ma Trailing Stop Method – This is by far the most basic trailing stop method we deploy, and the easiest to put into practice. In many ways, it is the most superior method of all as it forces the trader to focus on the trend, instead of the bar-by-bar noise, which can be quite confusing at times. However, its superior nature only works in trending markets and it loses all of its luster when markets are not trending. But, with proper timing, it is unrivaled when it comes to “milking” a move for all it’s worth. Note: We allow iFund Traders to use this method after they have graduated to level 4. Figure 2 a Buy (1) Buy (2) Short (2) 20ma Short (1) a 20ma Figure 1In the above Figure 1, the iFund Traders would simply buy at point 1, and sell into the initial rise, anticipating apullback before the secondary leg. At buy point 2, the iFund Traders could try to hold on to the trade as long asit remained above the r20ma. Essentially, at that point, the 20ma would become the iFund Traders trailing stop.Everything would be handled in reverse for Figure 2. The method applied to 5 and 15 minute charts worksextremely well.
  100. 100. Page 100The 20ma Trailing Stop
  101. 101. Page 101The 20ma Trailing Stop
  102. 102. Page 102 “iFund Traders with” The Market’s Three Trends CHAPTER 12iFund Traders Quote: “You can beat a horse race, but you can’t beat the races.” - Unknown
  103. 103. Page 103 The Market’s Three Trends1) The Up Trend – The up trend, by far the most popular of all, is usually defined by a series ofhigher highs and higher lows. Our definition is a bit more involved. In addition to higher highsand lows, we want an up trend to posses a smooth rising 20ma above a 200ma. Tip: In Up Trends, iFund Traders buy 1)    Uptrend dips toward the 20ma, and buy breakouts at or near the 20ma .2) The Down Trend – The down trend, by far the most feared of all, is usually defined by aseries of lower highs and lower lows. Our definition is a bit more involved. In addition tolower highs and lows, we want a down trend to posses a smooth declining 20ma below a200ma. Tip: In Down Trends, iFund Traders 2)    Downtrend short rallies toward the 20ma, and short breakouts at or near the 20ma.3) The Sideways Trend – The sideways trend, by far the most frustrating, is usually defined bya series of relatively equal highs and lows. This stage can be wide, usually when it forms afteran advance, or it can tight and narrow, usually when it is just a pause or after a sharp decline. Tip: In Sideways Trends, iFund Traders3) Sideways Trend buy/bid dips and short/offer rallies, or wait for the “halt” play and look for the new trend to emerge
  104. 104. Page 104 The Market’s Three Up Trends1) The Regular Up Trend – This uptrend, defined as rising price above a smooth rising 20ma,is a iFund Traders bread and butter trend. This trend will be played more than an other. Tip: In Regular up trends, iFund Traders1)    Reg. Up trend buy dips toward the 20ma, buy breakouts at or near the 20ma. 20ma2) The Power Uptrend – This uptrend, defined as a rising price above a rising 20ma which is alsoabove the 200ma, is a step above the regular uptrend. An overhead 200ma represents clouds in thesky, somewhat. When the 200ma is below all the action, it’s typically clearer sailing 2)    Power Uptrend 20ma Tip: In Power up trends, dips are no concern and can be used to accumulate larger positions. 200ma3) The Super Uptrend – The uptrend, defined as a rising price above a rising 8ma, which isalso above a rising 20ma, is the most powerful one in existence. It’s emergence signifies pureunadulterated buying power that one can trust absolutely. It does not get better than this! 3)    Super Uptrend 8ma Tip: In Super up trends, buying anywhere and anytime during the trend works 20ma amazing well.
  105. 105. Page 105 The Market’s Three Down Trends1) The Regular Down Trend – This downtrend, defined as a declining price below a smoothdeclining 20ma, is a iFund Traders bread and butter short trend. This trend will be played onthe short side more than an other. 20ma Tip: In Regular downtrends, iFund Traders1)    Reg. Downtrend short rallies toward the 20ma, and short breakdowns at or near the 20ma .2) The Power Downtrend – This downtrend, defined as a declining price below a declining20ma which is also below the 200ma, is a step above the regular downtrend. A 200ma belowthe price represents a floor of support. When the 200ma is above all the action, the price istypically freer to fall. 200ma 2)    Power Downtrend 20ma Tip: In Power downtrends, rallies are no concern and can be used to build larger short positions.3) The Super Downtrend – The downtrend, defined as a declining price below a declining 8ma,which is also below a declining 20ma, is the most powerful one in existence. It’s emergencesignifies pure unadulterated selling power that one can trust absolutely. It does not get betterthan this for bears! 20ma Tip: In Super downtrends, shorting anywhere and 8ma anytime during the trend works amazing well.
  106. 106. Page 106iFund TradersSuper Uptrend
  107. 107. Page 107Super Down Trend
  108. 108. Page 108 15-Minute Up TrendLook at the power of this uptrend thatdevelops after the 20ma halt. The 8 and20 ma’s begin to rise and remain parallelto each other as they take the pricehigher and higher Chart Courtesy of Realtick®
  109. 109. Page 10960 Minute Down Trend
  110. 110. Page 110 Sideways TrendThe 20ma says it all. The flat wavy 20 leads to price making relatively equal highsand lows above and below the 20ma. These “measured moves” become support andresistance points for traders to look for trading opportunities - do you see any?
  111. 111. Page 111 “Section III” The Trading Patterns CHAPTER 13“Do not have an interest in too many stocks at one time. It is much easier to watch a few than many.” - Jesse Livermore
  112. 112. Page 112 iFund Traders Buy Setup (VBS)BULLISH TREND• Rising price above a rising 20 Ma (a 20 Ma above a 200 Ma is ideal, but not required)FULL SETUP• Three or more consecutive Lower Highs (LHs), and Lower Lows(LLs) or,• Three or more Red Bars (RBs). Tip: Two LHs or RBs will often work in very strong trends.ADD-ONS• Bottoming sign: BT, GBR, NRB,NB• Location: Price support, Moving average support; specialty support items• Time: reversal times are not required, but should be notedBUY ACTION• Buy one pip above the prior bar’s high. Note: If the prior bar’s high is too far away, drop to the next lower time frame and use the prior bar’s high in that time frame as your alternative entry price. Example: If the prior 15-minute high is too far away, drop to the 5-minute chart and buy above the prior 5-minute high.• Place stop 1 pip below the entry bar’s low. If too close use prior bar’s low.TRADE MANAGEMENT• Set minimum target at the 50% Retracement level. The secondary target is at or near the prior pivot high and third is above the pivot high. Note: an overhead MA can also be a target.• After a 2 bar advance, place a trailing stop 1 pip under each prior bar’s low until a) objective is met; b) a topping tail forms; c) a wide range up bar forms; or d) a RBR dips below (takes away) the prior bar.
  113. 113. Page 113 iFund Traders Buy Tactics1) iFund Traders Buy set-up – This is the main buy set-up we use at iFund Traders, andit will represent anywhere from 65% - 80% of your longs. It is comprised of only a fewbasic criteria and can be used in all time frames. To make it as an iFund Trader, thistactic must be mastered.1) iFund Traders Note: – The location and time of occurrences of this main stay trading patternare the major keys. The iFund Trader wants to essentially focus on the VBSs that occur at or nearmultiple support levels and key reversal times. The ones accompanied by Narrow Range Bars(NBRs) are my personal favorite. We’ll talk about these as we move forward.
  114. 114. Page 114The iFund Buy Set – Up - VBS Long Entry Stop
  115. 115. Page 115The iFund Buy Set – Up - VBS
  116. 116. Page 116The iFund Buy Set – Up - VBS Bull Power Trend with a textbook VBS
  117. 117. Page 117 iFund Traders Sell Set-up (VSS)BEARISH TREND• Declining price under a declining 20 Ma (a 20 Ma below the 200 Ma is ideal, but not required)FULL SETUP• Three or more consecutive Higher Lows (HLs), and Higher Highs (HHs) or,• Three or more Green Bars (GBs). Tip: Two HLs or GBs will often work in very strong trends.ADD-ONS• Topping sign: TT, RBR, NRB,NB;• Location: Price resistance, Moving average resistance; Specialty resistance items• Time: reversal times are not required but should be notedSELL/SHORT ACTION• Short 1 pip below the prior bar’s low. Note: If the prior bar’s low is too far away, drop to the next lower time frame and use the prior bar’s low in that time frame as your alternative entry price. Example: If the prior 15- minute low is too far away, drop to the 5-minute chart and short below the prior 5-minute low.• Place stop 1 pip above the entry bar’s high. If too close use prior bar’s high.TRADE MANAGEMENT• Set minimum target at the 50% Retracement level. The secondary target is at or near the prior pivot low and the third is somewhere below the pivot low.• After a 2 bar decline, place a trailing stop 1 pip above each prior bar’s high until a) objective is met; b) a bottoming tail forms; c) a wide range down bar forms; or d) a penetrating GBR.
  118. 118. Page 118 iFund Traders Sell/Short Tactic1) iFund Traders Sell Set-up – This is the main sell set-up we use at iFund Traders and it will represent anywherefrom 65% to 80% of your shorts. It is comprised of only a few basic criteria and can be used in all time frames. Tomake it as a iFund Traders Trader, this tactic must be mastered. 200ma 200ma d20ma d20ma Stop Alert Short T1 T2 Ultimate Target Area T3 Pattern Set-up Short ActionTrading Note: The location and time of occurrence of this main stay trading pattern are the major keys. The iFundTraders Trader wants to essentially focus on the Sell Set-ups that occur at or near multiple support levels and keyreversal times. The ones accompanied by NRBs are my personal favorite. We’ll talk about these as we move forward.
  119. 119. Page 119 iFund TradersSell Set-up (VSS) Stop Short Entry
  120. 120. Page 120 iFund TradersSell Set-up (VSS)
  121. 121. Page 121 iFund Traders Sell Set-up (VSS)Bear Elephant forms during breakdown, the iFund traderknows the potential follow through from an event like this andseeks out short opportunities with each VSS
  122. 122. Page 122 “The Gift” CHAPTER 14 iFund Traders Quote: “I learned very early on that brokers are always wrong;analysts are always wrong; and clients are always wrong. But the tape is never wrong.” - Jesse Livermore
  123. 123. The “GIFT” Buy Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  124. 124. The “GIFT” Buy Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  125. 125. The “GIFT” Buy Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  126. 126. The “GIFT” Buy Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  127. 127. The “GIFT” Buy Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  128. 128. The “GIFT” Sell Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  129. 129. The “GIFT” Sell Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  130. 130. The “GIFT” Sell Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  131. 131. The “GIFT” Sell Click to add subtitleCopyright © 2010 * iFundTraders, LLC. * 2576 Broadway, #158, NY, NY, 10025
  132. 132. Page 132 “iFund Traders Reversal Signs” Bottoming Signals & Topping Signals CHAPTER 15 iFund Traders Quote: “I learned very early on that brokers are always wrong;analysts are always wrong; and clients are always wrong. But the tape is never wrong.” - Jesse Livermore
  133. 133. Page 133 Bottoming Tail (BT) & Topping Tail (TT)1) Bottoming Tail (BT) – This bottoming sign is one of the most compelling in existence.Whenever a BT forms after a steady 3 to 5 bar decline, a bottom is almost eminent. iFundTraders would look to buy once the tail represents 66% or more of the bar’s range and/or thevery next time a previous bar’s high is violated. TT makes up more than 2/3 of 20ma the bar’s range 3-5 Bar Decline w/ BT 3-5 Bar Rally w/ TT 20maBT makes upmore than 2/3 ofthe bar’s range2) Topping Tail (TT) – This topping sign is one of the most compelling in existence from thesell side. Whenever a TT forms after a steady 3 to 5 bar rally, a top is almost eminent. iFundTraders would look to short once the tail represents 66% of the bar’s range and/or the verynext time a previous bar’s low is violated.
  134. 134. Page 134 Bottoming Tail (BT) & Topping Tail (TT)1) Bottoming Tail (BT) – This bottoming sign is one of the most compelling in existence.Whenever a BT forms after a steady 3 to 5 bar decline, a bottom is almost eminent. iFund Traders would look to buyonce the tail represents 66% or more of the bar’s range and/or the very next time a previous bar’s high is violated. Alternate Stop 20ma Stop 3-5 Bar Decline w/ BT Entry Entry Point 3-5 Bar Rally w/ TT Stop 20ma Alternate Stop 2) Topping Tail (TT) – This topping sign is one of the most compelling in existence from the sell side. Whenever a TT forms after a steady 3 to 5 bar rally, a top is almost eminent. iFund Traders would look to short once the tail represents 66% of the bar’s range and/or the very next time a previous bar’s low is violated.
  135. 135. Page 135VBS with BT Buy Stop Alternate Stop
  136. 136. Page 136 VBS with BT Buy BOP StopBuy Stop
  137. 137. Page 137 The Power of the BTa. What event was marked by the number 1?b. Where would your entry and stop have been?c. What event was marked by the number 2?d. Where would your entry and stop have been? 2 1
  138. 138. Page 138 VSS with TT Alternate StopBDP With StopElephant bar Short
  139. 139. Page 139 The power of the TT This is a very powerful 1 event by itself, but even better when it occurs at a location item, do you see one?a. What event was marked by the number 1?b. Where would your entry and stop have been?c. What price was the bar-by-bar exit?d. What price was the 8ma trail exit?e. Is this a counter-trend play?

×